October 11, 2023

Building Out Your Core with US SMID and Emerging Markets Equities

We recently presented a webinar with the Association of Canadian Pension Management (ACPM) that explored the case for US Small/Mid-Cap (SMID) and Emerging Markets (EM) Equities. Here's a quick summary - please see the video links below to hear it directly from our US SMID and EM analysts:

In addition to providing diversification benefits, both SMID and EM present excellent opportunities for diligent stock pickers as there is a significantly larger pool of companies than in large cap developed markets, with far fewer analysts covering them. The broader base also means less concentration, and in SMID markets in particular, active managers regularly outperform the market - with approximately 70% of managers beating the Russell 2500 in the last five years! Part of the opportunity here comes from the fact that the vast majority of merger and acquisition activity happens among SMID companies.

Emerging Markets benefit from high economic growth and growing market clout, and dividends have provided a significant portion of investment returns. After a decade of lagging the traditional elements of a "core" investment portfolio, both SMID and EM stocks are trading at compelling valuations, especially within a Value approach. As such, we believe both of these strategies present compelling investment opportunities right now.

Leith Wheeler clients have enjoyed outperformance in both the SMID and EM funds of +2.2% and +4.6% per annum, respectively, over the last five years.  

Annualized Historical Performance
As of September 30, 2023*

US Small/Mid-Cap Equity with David Slater, Principal, Portfolio Manager - US SMID Equity (16:21)

Emerging Markets Equity with David Feygenson, Managing Director, Portfolio Manager / Analyst at Barrow Hanley (19:25)

Q&A with Perry Teperson, Managing Principal, Portfolio Manager - Institutional Clients (16:36)

If you'd like to discuss our US SMID or Emerging Markets offerings, or would like a copy of the slides from the presentations, please email us at info@leithwheeler.com or reach out to Perry directly.

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*Source: Leith Wheeler Investment Counsel, S&P Dow Jones Indices, MSCI Inc. Fund and index performance are total return and gross of fees expressed in CAD currency unless otherwise stated. Since June 30, 2020, foreign index returns have been converted to C$ based on the Bloomberg FX rate. The Bank of Canada noon rate was used prior to June 30, 2020.

‡ MSCI Inc. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.